Gray Television reveals Libor plus 200 bps interest rate for revolver

By Angela McDaniels

Tacoma, Wash., Jan. 3 – Gray Television, Inc. said the initial interest rate on its new $200 million revolving credit facility is Libor plus 200 basis points.

The margin ranges from 175 bps to 250 bps depending on the company’s first-lien leverage ratio, according to an 8-K filing with the Securities and Exchange Commission.

As reported in November, the company is using the revolver to replace its existing $100 million priority revolver due February 2022.

The new revolver matures Jan. 2, 2024 and was provided under an amendment and restatement made to the company’s credit agreement on Wednesday.

The amendment and restatement also provided for a new $1.4 billion term loan C due Jan. 2, 2026.

Pricing on the incremental covenant-light term loan C is Libor plus 250 bps with a 0% Libor floor, and it was sold at an original issue discount of 99.75. The debt has 101 soft call protection for six months.

The company must make quarterly principal reductions on the term loan C of $3.5 million beginning March 31.

The commitment fee on the revolver ranges from 37.5 bps to 50 bps.

The new term loan C and revolver are secured by substantially all of the assets of the company and substantially all of its subsidiaries, excluding real estate.

Gray Television’s credit agreement also provides for a term loan B-2 due 2024 that was advanced in 2017. Its interest rate is Libor plus a margin that is either 225 bps or 250 bps, depending on the company’s leverage ratio. The principal amount outstanding on the term loan B-2 was $595.03 million as of Wednesday.

During syndication in October, the term loan C was downsized from a revised amount of $1.65 billion and an initial amount of $2.15 billion, pricing finalized at the high end of the Libor plus 225 bps to 250 bps talk and the discount was tightened from 99.5.

The term loan downsizing was done as a result of the company’s decision to sell 7% senior notes due May 2027. The notes were sized at $500 million when announced and then were increased to $750 million.

Proceeds from the term loan C were used to fund a portion of the cash consideration of the company’s acquisition of Raycom Media, Inc., which closed on Wednesday.

Raycom was purchased for $3.65 billion in total proceeds, consisting of $3.55 billion in enterprise value and $100 million of Raycom cash. The consideration consisted of $2.85 billion in cash, $650 million in a new series of preferred stock and 11.5 million shares of Gray common stock.

In connection with the merger, the companies divested nine television stations in overlap markets, and Raycom spun off two subsidiaries, CNHI, LLC and PureCars Automotive, LLC, to its shareholders.

Gray Television estimated that had the merger been completed on Monday, its outstanding debt would have been $3.97 billion, its cash on hand would have been about $240 million, and its leverage ratio would have been in a range of about 4.75 to 5.0 times.

Wells Fargo Securities LLC, Bank of America Merrill Lynch, Deutsche Bank Securities Inc., J.P. Morgan Securities LLC and RBC Capital Markets led the term loan C. Wells Fargo Bank, NA is the administrative agent.

Gray Television is an Atlanta-based television broadcast company. Raycom is a Montgomery, Ala.-based broadcaster and owner and operator of television stations.

Previous stories incorrectly referred to the new $1.4 billion term loan C as a term loan B.

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